CNR:

Since the 18th CPC National Congress, what efforts have the tax authorities made in terms of implementing the new development philosophy and leveraging the role of tax policies in order to promote high-quality economic and social development? What achievements have been made? Thank you.

Wang Daoshu:

Thank you for your question. Since the 18th CPC National Congress, the tax authorities have implemented General Secretary Xi Jinping's important remarks on tax work and have practiced the new development philosophy featuring innovation, coordination, green, openness and sharing in a full, accurate, and comprehensive manner so as to ensure that the tax work will serve the overall economic and social development and promote high-quality economic and social development.

First, we are keeping focus on innovation to drive growth. A series of policies have been adopted to support scientific and technological innovation, such as the preferential income tax rate for high-tech enterprises, the R&D expense super deduction policy with broader coverage, and higher deduction rates and accelerated depreciation for fixed assets, all of which spur enterprises to increase their investments in science and technology. In 2020, a total of 53,000 enterprises enjoyed the preferential tax policies for high tech firms, an increase of 82.8% in terms of numbers compared with the level of 2013, with enterprises' income tax deduction and exemptions reaching 259.6 billion yuan. In 2020, 427,000 enterprises enjoyed the R&D expense deduction policy, and the amount of tax deduction and exemption was 429.5 billion yuan, which was 1.9 times the amount of 2013. Enterprises have become more vigorous for innovation, and their R&D intensity has increased from 2.08% in 2013 to 2.44% in 2021.

Second, we are focusing on coordination to serve the regional development strategy. The administration has set up a group on taxation work to consistently implement preferential tax and fee policies to promote large-scale development in the west region and support the construction of the Hainan Free Trade Port. We have launched multiple facilitation measures for the integration of the tax collection and services to support the integrated development of the Beijing-Tianjin-Hebei region, the development of the Yangtze Economic Belt, and the integrated development of the Yangtze River Delta, thus vigorously enabling regions to complement each other with their respective strengths and facilitating flows of factors of production. From 2016 to 2021, tax revenue's average annual growth rate in the central and western regions was 6.8% and 5.8%, respectively, 1.2 percentage points and a 0.2 percentage point higher than the overall annual growth rate in the eastern region. The proportion of tax revenue in the central and western regions has increased, reflecting a more coordinated development among regions.

Third, we will keep focusing on green development to help build a beautiful China. By thoroughly implementing Xi Jinping Thought on Ecological Civilization, the administration has established a green tax system featuring the governance of multiple taxes such as resources tax, environmental protection tax, consumption tax, and enterprise income tax. We have introduced tax incentives while offering tax restriction measures simultaneously. Since the introduction of the environmental protection tax in 2018, the pollution equivalent per 10,000 yuan of GDP decreased from 1.16 in 2018 to 0.86 in 2020.

Fourth, we are focusing on opening-up to promote international economic and trade cooperation. Since 2013, the administration has accelerated the negotiation, signing, and revision of tax treaties with key countries, and carried out consultations with tax authorities in relevant jurisdictions, thus eliminating 28.3 billion yuan of double taxation for taxpayers and effectively lowering the tax burden on enterprises. The time for processing export tax rebates was reduced to less than seven working days in 2021. From 2013 to 2021, a total of 10.6 trillion yuan of export tax rebates was granted to enterprises, with an average annual growth rate of 6%, thus stabilizing foreign trade. The policy of deferred tax payment for foreign reinvestment has been earnestly carried out. Since its implementation in 2018, 41.3 billion yuan of deferred tax payment has been handled, which has driven 426.4 billion yuan of dividends reinvestment, thus promoting foreign investment.

Fifth, we will keep focusing on shared benefits to improve people's well-being. The administration has strengthened the policy of giving priority to employment and continued to increase tax support for small and micro-businesses. The VAT threshold for small-scale taxpayers has continuously increased from 30,000 yuan to 150,000 yuan, and the income tax threshold for small and low-profit enterprises has been lowered several times in a row. We have continued to implement policies of starting businesses and finding jobs for key groups, reduce the burden on market entities, and sustain employment and create jobs. With the implementation of the individual income tax reform, the tax burden of hundreds of millions of natural person taxpayers has been significantly reduced. Most taxpayers with an annual income of less than 100,000 yuan do not need to pay individual income tax.

China's economic and social development is under great pressure due to the resurgence of the epidemic and changes in the international situation. We will give full play to the role of taxation in raising fiscal revenue, regulating the economy, adjusting the distribution, and integrating taxation more deeply into all aspects of national governance. The taxation department will bravely shoulder responsibilities and overcome difficulties, firmly keep the economy stable, effectively protect and improve people's livelihoods, stabilize and expand employment, and contribute to high-quality economic and social development. Thank you.

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